Israel Aerospace Industries (IAI) and Formula Systems, an Israel based software holding company today announced that they have entered into a definitive agreement for the purchase of TSG – a subsidiary and the military arm of Ness Technologies, engaged in the fields of command and control systems for all echelons, maritime security, intelligence, air and missile defense, homeland security and Cyber security.

The total purchase price in the transaction will be $50 million in cash (subject to certain adjustments), with each of IAI and Formula acquiring 50% of TSG for US$25 million (subject to certain adjustments). The consummation of the transaction is subject to, among other things, obtaining certain regulatory approvals.

TSG is a leading provider of core command and control systems to Israel’s defense organization, including the Israeli Defense Forces and the Israeli Police, and its activity is well suited for both parties. The acquisition represents the parties’ strategic decisions to expand their scope of activities, and to preserve leading positions in the markets where they operate, through M&A activity.

The parties will focus on turning TSG into a leader in its field in Israel, by maximizing the synergies between TSG, IAI and Formula and pursuing its expansion, among other ways, through mergers and acquisitions of companies that operate in complementary areas.

“The acquisition deepens our hold in the areas of command and control, intelligence and homeland defense, both in Israel and among foreign customers” Joseph Weiss, IAI’s CEO and President said. For the Formula group, the acquisition adds a significant fourth leg to its portfolio, extending their reach to the defense and growing cyber security industries. Not less significant is their partnership with Israel’s largest aerospace and defense company – IAI. “We can think of no better partner in this acquisition than Israel Aerospace Industries and look forward to our close collaboration.” Guy Bernstein, Formula’s CEO, commented.

Ness has recently completed the delivery and deployment of a real-time maritime intelligence solution with a Southeast Asian customer. The new system system provides situational awareness of maritime environments to support Counter-Piracy, Exclusive Economic Zone (EEZ) Protection, and Coastal Surveillance missions.

Following the acquisition of Ness Technologies by Citi Venture Capital International (CVCI) in 2011 CVCI have sold its Ness’ Israeli assets, except TSG.

In the recent months the company negotiated the sale of TSG with Israel’s largest defense contractor, Elbit Systems, and IAI. TSG and IAI often cooperated in the past, on domestic and export projects, where TSG performed as a leading subcontractor for major IAI projects.

As a government owned company.The partnership with Formula enables IAI to acquire other companies without full ownership. Another government owned company – RAFAEL has followed the same path in the acquisition of Controp Precision Technologies, jointly with Aeronautics.

In response to the hybrid warfare with the Russian Republic, industries across Ukraine were called to improve the warfighting capabilities of the Army by improving existing hardware and producing innovative concepts that could meet the current and future hybrid challenge. Remotely operated systems and capabilities were high on the agenda, with several remotely controlled weapon stations, turrets, and robotic ground vehicles.